Week 7 - Pt.1 Management Transcript

SPEAKER 0 Hi and welcome to week seven of management. 1035. This week we're talking about alcohol, the business of alcohol. Uh, you'll have read some material. We're gonna have some uh discussion about it in, in the tutorials. And we are, it's not week seven, I don't think, but it doesn't matter, i...

SPEAKER 0 Hi and welcome to week seven of management. 1035. This week we're talking about alcohol, the business of alcohol. Uh, you'll have read some material. We're gonna have some uh discussion about it in, in the tutorials. And we are, it's not week seven, I don't think, but it doesn't matter, is it? Yeah, it is week seven. Sorry. Uh We are going to have a group presentation or two about aspects of alcohol as a business. So I'm looking forward to, to seeing how that's gonna proceed. But I want to lay some groundwork by making a point and that point is that alcohol, uh spirits, whatever have traditionally been a business, a business that's found everywhere. Virtually any society, any civilization that you go and look at. Oh, yeah, they were, you know, fermenting this into wine or they were creating this beer or whatever uh and exchanging it and gradually exchanging it over broader territories. Uh And it's also always been political that, that the exchange of these goods, the use of these goods, uh the impact of them has had a significant political uh aspect to it throughout history. And I want to deal with those a little bit because I think if we're looking at a global market in alcohol, which we're looking at now, uh We have to understand where it came from and why at times it can be controversial. So let's look at things, we're gonna look at two examples in particular from history. Once again, history because history is great. Uh Two examples that tell us a little bit about the early development of spirits as something that has a political component. Gin in particular uh impact of trade policy and the unintended consequences of trying to control alcohol consumption. And rum, which uh which is perhaps the most political of, of uh spirits. So let's talk about gin and in particular, the gin craze in 16th 17th century England, in particular, um for a long time, people drinking wine, uh had used things like juniper berries and herbs and stuff like that to give it flavor and also to try and contribute to the idea that, hey, this might be medicinal. Um as people began to figure out how to distill things into a purer spirit, pure alcohol, then things like the, the juniper berries and other sort of things were used to add more flavor to make it more palatable while delivering that uh quite potent combination. In, in the 16th century, the Dutch, which is the 17 hundreds, the Dutch had, had created something they called Genever, which the British shortened a gin which combined sometimes wine, sometimes alcohol with not just juniper berries, which made it what we understand as gin, but other kind of herbs as well into something that began to get a lot of local popularity as, as a beverage in Holland, it was inexpensive to make really inexpensive to make and quite popular. But it's also gonna be quite political. In the 16 hundreds, William the third became the king of England. He was from Holland European politics. Uh And so he becomes the king of England. He comes over from Holland. One of the things he brings with him is this sort of taste for Gin which he introduces into the British market. Now he's the king of England. The English are fighting against the French all the time. And one of the things that particularly annoys William the third and other elite people in England is that people in people in England like to drink French wine and they like to drink French brandy. If they're gonna have spirits, they like French, brandy. And the French make a huge amount of money sending wine and brandy into England even in times of war, the especially the ruling classes in England would bring in large amounts of French wine and spirits. And so William says, well, this sucks. We need, uh we need to stop giving our money to the French and helping them fight us and we need domestic production. All right. So he places very large tariffs on the importation of French brandy and wine made them hugely expensive. And so English consumers begin to look around, what else can we drink? We have to have alcohol. What kind of alcohol can we have? Uh Now, traditionally, that would have been ale or beer uh consumed in big mugs, however, you know, might want something with a little bit more of a kick to it. So William introduces the idea of gin and he begins to like, make very easy to get a license to produce gin. And if you produce Gin for the domestic English market, you get all kinds of tax breaks. What that means is suddenly England is literally awash in inexpensive, very potent Gin that the British people for the most part have no idea how to drink. So they tend to drink it in the same way, they drink beer, pour it into a mug and drink it, which for those of you and you're all too young to be drinking alcohol. So stop. But uh if you do drink spirits, you will know that that is not the way to drink spirits. Uh So you have a lot of uh drunkenness. So this is AAA lithograph. Uh a sort of thing that would have appeared in a publication. It's called Gin Lane. It's a back lane in London. Up and down the lane are a whole bunch of gin shops where you could go in and you would buy a glass of Gin and consume it. It was not good gym, it was bad gym. And so this is, this is the situation that develops all um all not just in London, but all around England, any kind of community, people struggling uh with public drunkenness and despair. And so we see this woman right there and there her name colloquially or uh please uh people say her name is Mary. So who's Mary? Mary is a mother? Mary has spent most of her money on Gin and she is quite inebriated, she has her baby with her and she sits down on those stairs in her inebriated state and the baby falls out of her lap and plunges to its death. So baby's dead. So what do you do about that? Well, you complain bitterly as the poster does about the ready access to Gin. You arrest Mary and hang her, which they did. Uh But that doesn't solve the problem that it is way too much gin around and, and people aren't consuming it responsibly in part because the British government has made it so easy for distillers to produce it in large amounts in order to, you know, create problems for the French. So for the first time, you start to have a backlash against the consumption of alcohol, you start to have organizations who temperance organizations who say we should be producing alcohol. We shouldn't be selling alcohol. Alcohol is very, very bad for you. It's bad for the economy, we should stop alcohol. So, in fact, they're not in favor of temperance, they're in favor of total prohibition. Uh, the government has to listen to them at least a little bit. And so they do and they say, ok, Gin Act 1751 here's the new rules. It's really hard now to get a license to make gin. And we're gonna tax that excise tax, that gin. So the gin becomes much more expensive and you typical English consumer go back to drinking beer the way you should uh instead of this incredibly potent gin and it sort of works. Gin's still around. But in the 18 hundreds, it begins to have its reputation restored somewhat, at least with some people. Uh Not with all because you can see here, this illustration is entitled the Gin Shop. And I love, love, love this picture because it has everything in it. You can see this guy has come into the gin shop and he is buying gin. But oh no, it's a trap. It's got that man trap there because he's been trapped by alcohol. You see death coming in saying, you know, let me ready to get you and see in the back they're making Gin, they're using human skulls, lovely, lovely imagery, wonderful stuff. People still drank it like crazy. Um But one of the things that changed its reputation again, a function of British colonialism, the British found themselves in all sorts of warm climates where they could get malaria, whether it be the Caribbean be in uh Asia Pacific, there's danger of malaria and there's no real cure for malaria still really isn't. Uh But one of the things that went around was quiNINE, which is made from the bark of a tree, you make it into this drink. Um and it will mitigate the effects of uh malaria and it might even help prevent malaria like zero scientific evidence for that. But you know, it's 1800. Uh So yeah, quiNINE, great. So the British army says in British Navy and British civil service says to all their people they're sending out to these far flung imperial places. Ok? While you're out there, you have to take quiNINE every day, but quiNINE tastes awful, like really awful. So you give somebody this little thing of quiNINE and say here you go drink quiNINE and they say no, it's terrible. I'll pretend to drink it. Oh finished. Um So the British have to, they have to think how can we, how can we get them to drink the quiNINE? Well, why don't we just dump it into some gin and maybe we'll put some Seltzer in that as well. Some bubbly water. Uh and then it will be a tonic against malaria. So they invent the gin and tonic which becomes this globally famous beverage, which has its origins in their attempt to use gin to convince people to take this horribly terrible medicine. Uh The British become and remain huge global players in the gin industry. Uh despite the efforts of the, the prohibitionist movements. Uh and as I say, a lot of the, the pre uh the prevalence of gin, especially in countries with a British background comes from this colonial experience. Let's talk about what I think is maybe the most political of the alcohols. Rum uh rum is distilled from molasses uh wherever you grow sugar and then you uh manufacture by s centrifuge process of some sort. You man, you, you turn that sort of sugar cane into sugar. And one of the by-product is molasses, this thick dark uh sugar by-product which they find out fairly quickly can be distilled into alcohol. And so it becomes relatively popular. Say one of the uh um sort of ironies of this is that part of the history suggests maybe not solid evidence for much of this, that it was the African slaves they brought over to work the sugar plantations who figured out that you could distill this by-product, this in essence, almost waste product into something quite alcoholic like rum. Um So the French and the, and the British colonies both developed significant sugar based plantations in their colonies around the Caribbean. Uh Rum still produced all over the Caribbean. It's one of the, the prime locations for it. What does Rome require cheap, plentiful labor? Uh And as I say, sugar requires that the introduction of slaves were followed by that. Now want to talk about this, this comes from my personal liquor cabinet. Uh And that's a really interesting example of the, of the political nature of rum and mercantilism, which we're gonna talk about merc mercantilism as we go forward. Uh French colonies in the Caribbean would produce sugar and they would produce rum within the mercantilist triangle that was designed to be traded within the French trading system. You'll see more of that next week. Um Part of that system was in New France up in what's now Canada. And so out in Louisburg, which is at the tip of Cape Breton, there's a big French fortress and it was a waste station. Stuff would come from the Caribbean be transferred and shipped off to France including big barrels of rum. Some of that rum would stay in the, in the French colony. So when Parks Canada, he said jumping forward several 100 years when Parks Canada took over this big fortress called Louis, uh they saw an opportunity to make some money they brought in a lot of rum. Actually, I think largely from former British colonies now. Uh and bottled it at the fortress called it Fortress Rum and tied into the history of, of not just the fortress but the French colonial system. So I quite like that bottle as a symbol of that of again, of the political nature of this. So starting in 1731 if you were in the British Navy and you were at sea, you were entitled under British naval regulations to have a pint of Jamaican rum for each 1.5 men. So two p two pints for three guys. And this was not just like your nice light cocktail run, this was heavily serious dark navy run very potent. Uh And they drank it every day. You, you get this poured into a kind of a tin mug and you were watched drinking it to make sure you drank it. Um And it was British regulation until the 19 seventies. If you were on a British ship, it ship at sea, they tended to moderate the amount you got as time went on. But you were entitled to that daily ration of rum uh as well as the Canadian Navy. Now, I love the pitcher because the pitchers from Second World War, all the guys in the white uniforms on the left, they're British, all the guys in the other uniforms on the right. They're Americans. We know this is their meeting on probably in the Pacific, they're meeting on a British ship because they're drinking. You weren't allowed to drink on the American ships. And so they prefer to have their meetings on the British ships. But rum, it is, as I said, it has this colonial past. It's all tied up with colonialism in that period. For example, uh the Caribbean Islands produce lots and lots of, of British rum, lots of British rum. Uh therefore, when the American colonies, which were British colonies, they had sugar plantations, they thought about making rum. The British said, no, you can't make rum. And that led the Americans to instead produce whiskey or bourbon, which completely changes the American historical background with, with alcohol as well. But maybe this is, this is the political story here. The one that I, I like a great deal, Cuba Spanish colony, uh sugar plantation, Spanish sugar plantations uh operate much the same way the British and the French ones do uh by the 18 eighties, the, the the Bacardi family, the, the founder Fo Bacardi has a big rum production facility in Cuba. His pro uh high end product is the official rum of the Spanish royal family. Uh And he builds a very successful business in Cuba, the beginning of the 20th century. He's doing a lot of business and into the uh like the teens, the twenties and thirties in Cuba. He's doing a lot of business with American tourists. They arrive wanting some new beverage from the Southern US called Coca Cola. And he combines that with his rum and calls it a Cuba Libre, a Rum and Coke. But that phrase Cuba Libre, which still what some people call the rum and Coke takes on a very different meaning in the 19 fifties during the communist revolution. Um Fidel Castro uh takes over the the government of Cuba overthrows the Batista government that uh largely supported by the Americans and especially American criminal elements. So Castro takes over and one of the first things that he does is to nationalize without compensation, all of the distilleries. And so suddenly the Bacardi family finds that their historic properties in Cuba, they've lost them to this upstart Marxist who uh who's taken over all their property. And Castro, no fool immediately begins to put those into production for rum that he can sell to help support the Cuban economy. The Bacardi family fled uh and they fled to Puerto Rico, an American protectorate and they fled to Puerto Rico because they had already begun diversifying around the Caribbean, but especially into Puerto Rico. They are, they had a strong presence in Puerto Rico to which they could transfer their global because they were global operations and they grew to become a huge global producer of rum, one of the biggest in the world. If you think about Bacardi. Uh you know that is the name in rum production probably. Uh and the family is wildly successful. They make huge amounts of money diversify and the company is quite successful, but they do not forget, they do not forget the co the politics of this. And they look at what's going on in, in Cuba and they say that's, that's my distillery. I want my distillery back and I want compensation for all the years. You stole my distillery. Oh, no, go back um you stole my distillery and I want compensation and I want my distillery back and the Cuban government are basically like uh too bad. Um But this has again, this is political because there is a very large expatriate Cuban community in the United States, particularly in Florida. And for some reason, New Jersey, uh there's also a significant Puerto Rican community with ties to the, the Bacardi Corporation Foundation and they have a tremendous influence in American politics. So when various American presidents like Bill Clinton, like the bushes like Obama have said, you know what this embargo we have against Cuba, this, you know, it doesn't make sense in the 21st century. What are we thinking? Uh They are faced with a very efficient political protest that says no lessening of the embargo until we get our property back. And so the the politics of rum persists into a very 21st century global uh political situation uh because alcohol is very political. Thanks.